Three mainland tourists study prices of iPhones at a cell phone shop in Causeway Bay, Hong Kong. Some Chinese mainlanders prefer to buy their iPhones in the special administrative region for a lower price and more features. By Edmond Tang

Customers say lower prices and additional features on HK version make it worth the trip

A man in a gray suit, a cell phone in one hand and a large black suitcase in the other, entered an electronics shop in Times Square, a large shopping mall in Hong Kong.

He headed directly for Apple's iPhone counter.

Within a minute, he had checked the prices on the tags and made a decision to buy an iPhone 32GB.

That is a scene often replayed in electronics shops in Hong Kong.

IPhones were released in the Special Administrative Region in July 2008. Since then, tens of thousands of the mobile devices made by US-based Apple Inc have been sold to Chinese mainlanders.

Even though the iPhones were officially introduced by China Unicom on the Chinese mainland on Oct 30, 2009, mainland purchasers continue to snap up iPhones in Hong Kong.

Cost advantages

The biggest advantage to traveling to Hong Kong is the price. iPhones cost about 20 percent less there.

The popular smartphone has been on the Hong Kong market for more than a year, so Hong Kong retailers also won early status as major clients of Apple, which came with main sourcing channels and discounted prices.

The iPhones being distributed by Unicom on the mainland sell for 4,999 yuan to 6,999 yuan - about 1,000 yuan more than the price in Hong Kong.

"About 70 percent of our customers buying iPhones are from the mainland," said Maxwell Leung, a sales staff member at Fortress, one of the two larger electronics retailers in Hong Kong.

Sun Changquan, an Apple products fan living in Beijing, said he asked a friend to bring him an iPhone from Hong Kong in August, 2009.

He said he has loved the idea of the iPhone since it was introduced to the US market in 2007, but he waited until a third-generation (3G) iPhone was released in Hong Kong.

Before China Unicom introduced the iPhone to the Chinese mainland, the phones were linked to the US-based AT&T network, so they could not use networks provided by mainland operators.

They had to be "cracked" for use on the mainland, which might cause some negative effects on the phone's operation. The possible problems include a decline in voice quality, difficulty obtaining timely system upgrades, reduced battery life and cumbersome software installation.

By contrast, Hong Kong iPhones did not have these problems. They were "unlocked" by AT&T, so all of their functions could be used. Consumers could use them simply by inserting their Chinese SIM cards.

In addition, the Chinese-language system installed in Hong Kong iPhones was attractive to Chinese consumers.

After China Unicom released iPhone, it blocked the WiFi (wireless Internet) connection. So if a consumer buys a China Unicom iPhone, he still cannot enjoy the wireless features, but Hong Kong iPhones can offer the service.

"Chinese people usually tend to seek perfection, when buying things, especially high-end fashion electronic products. Castrated iPhones make them feel something is missing," Sun said.

"Some consumers will certainly buy licensed goods, but most people definitely will buy parallel iPhones with all functions," he said.

Buying options

The most common way for mainlanders to buy iPhones in Hong Kong is through electronics chain retailers like Fortress or through individual buying agents. Their shops can be found in shopping malls such as Time Square and Harbor City.

Both malls draw regular crowds of mainland tourists buying iPhones. However, customers have to order first and then return when the phones are ready. It usually takes a month to a month and a half.

"It is because of high demand for iPhones in Hong Kong. The market is getting beyond the supply," said a member of the sales staff at Apple Hong Kong.

Large shops are not the only choice. Some small shops, rather booths, are selling spot goods for a price about HK$100 to HK$400 higher than the larger stores.

The Sincere Podium in Mong Kok is well known to local people and now also to mainlanders.

Ah Fai opened a small cell phone shop at Sincere Podium. Having been in the cell phone business for years, Ah Fai stored two boxes of iPhones based on his relations with suppliers.

"Some clients bought five to six iPhones at a time and took them to Shenzhen through Lo Wu," he said. "The price is a little higher than (other stores), but you can get the phones right away, and you don't have to wait."

Ah Wing is a Hong Kong-based purchasing agent who said she doesn't believe the Unicom iPhones for sale on the mainland will affect her business.

"That is just cooperation between China Unicom and Apple. Without WiFi, those are not real iPhones." she said.

She buys iPhones at electronics shops in Hong Kong and resells them at a price of 5,090 yuan, earning a profit of HK$400 to HK$ 500 per phone.

Online sales

Businesses also are selling iPhones online. According to Taobao.com, some online shops sell 30 to 60 Hong Kong-version iPhones a month. There are more than 1,000 online shops selling iPhones from various suppliers.

Thanks to Zhongguancun, a famous IT and electronics shopping district in Beijing, mainlanders also are able to buy US-version or Hong Kong-version iPhones in the capital city.

"Usually the vendors will provide warranties. There also are special shops doing maintenance service in Zhongguancun," mainlander Sun told China Business Weekly.

The number of iPhones entering the Chinese mainland market through various channels exceeded 1 million by May of 2009, according to a report released by telecommunications consulting service company Ovum.

China Unicom said on Dec 10 that it had sold nearly 100,000 iPhones.

IPhones are not the only electronic goods heavily purchased by mainland consumers in Hong Kong.

Mainland visitors also are interested in cameras and laptop computers they said are sold at significantly lower prices.

For Hong Kong retailers, the mainland market has proven a major boom.

According to Hong Kong's census and statistics department, retailing volumes increased by 58 percent during the first five years after the central government in 2003 began allowing individual travel to the Special Administrative Region.

(China Daily 12/28/2009 page12)